The fight between Carl Icahn and Time Warner ended in a whimper today (Friday) as a settlement between the two points toward Icahn backing down from his battle far sooner than anyone expected.
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The stakes were high as this would have been the largest proxy fight in history. It was somewhat low-key in comparison what some thought might happen as in the past Icahn has pursued companies for years without giving up until he got what he wanted. This one only lasted about six months.
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Still it wasn’t a total loss for Icahn and his allies as they did pressure Time Warner to increase its repurchases of shares four-fold to $20bn, and cut costs.
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Along with that they will have to add a minimum of two new people to the board. There will also be an opportunity to profit from any upward movement in Time Warner’s share price in the immediate future.
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While this sounds like a lot to give up, in comparison to what the stated goals of the protesters were, it wasn’t too bad. What they had wanted to do was to break the conglomerate structure that in their view was created a bureaucratic nightmare through poor management and lack of control over the costs. Their purpose was to break Time Warner into four separate companies.
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There were many that felt that this could only end this way as Time Warner is the biggest media company in the world with a market capitalization of $84bn. Icahn’s share, in combination with the hedge funds SAC and Jana, wasn’t even 3.5 per cent.
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It is interesting that many are now calling this a defeat for Icahn and his partners, and I suppose from his past triumphs, it could be called that. Yet he moved a major company in the world to make some huge concessions. I guess that’s what happens when expectations are that high.
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While the agreement reached between CEO Parsons and Icahn ended things a lot faster than expected, there are some analysts that are still questioning whether the structure of Time Warner is the best for the company.
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Hmmm. I wish some of my defeats went this well.
» http://www.bizofshowbiz.com/2006/02/post.html from BizofShowBiz
After years of aggravation with the performance of Time Warner, the world’s largest media company, Ted Turner has decided that he will step down from the board. a Even in his leaving Turner was somewhat cool in his evaluation... [Read More]
Tracked on: February 24, 2006 9:16 PM | Permalink to Trackback